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Allsec Technologies Ltd has decided to forego two of its major telecom clients in India.
This is part of the company's reorganisation to focus on the US and UK markets than on the ‘less profitable' Indian market, said a senior company official.
“The move could impact employees working with those clients but it is too early to comment on what the company plans to do,” said Mr R. Jagadish, co-founder and CEO, Allsec, without revealing the client names.
The two telecom clients provide the Chennai-based business process outsourcing company nearly 30 per cent of its revenue but reduced the profits, he told Business Line .
At present, India contributes nearly 70 per cent of Allsec's revenue. This will drastically reduce with focus shifting to the US and the UK. “For the last four years, we sincerely tried our best to be in the India market. However, we did not get the right pricing from clients. This has forced us to change our strategy this year,” he said.
Mr Jagadish said margins were poor and the two customers were pushing up the cost. “We are finishing the contract and not renewing. There is no loss in relationship,” he said.
For the year ended March 31, 2012, the company reported a net loss of Rs 14.7 crore on revenue of Rs 183 crore. The loss has been mainly due to the India business, he said.
However, the company expects US and UK markets together contribute 70% of revenues in the next couple of years.
Mr Jagadish said that in the US the company has got some orders in the employee payroll processing business, which is doing well. “This is our growth story,” he said. Mortgage processing is another area on which the company will concentrate following the acquisition of Retreat Capital in the US last year. Last year, it was brought a triple digit growth in Retreat, he said without giving any numbers.
In employee pay roll, the company has over 50 clients with nearly 2.50 lakh employees. Allsec will do all the functions that a client's HR department will normally do, he said.
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